By Kana Nishizawa Jan. 25 (Bloomberg) -- Japanese stocks slumped for a second day on concern that a plan by U.S. President Barack Obama to limit risk-taking at banks will crimp profits and derail a global economic recovery. Japan Petroleum Exploration Co. retreated 0.6 percent after crude dropped in New York on Jan. 22 to the lowest price in a month on speculation the Obama plan will cut investments in commodities. Mitsubishi Corp., which gets 39 percent of sales from commodities, declined 1.1 percent. Toyota Motor Corp., the world’s largest carmaker, lost 1.7 percent after the Tokyo Newspaper reported the company’s auto recall may climb to more than 4 million vehicles. “The fact that people are selling so much shows the insecurity they have about the likelihood of Obama’s plan proceeding,” said Masaru Hamasaki, chief strategist at Tokyo- based Toyota Asset Management Co., which oversees the equivalent of $14 billion. “Commodities are risk investments, so they are being sold for the same reasons.” The Nikkei 225 Stock Average fell 0.6 percent to 10,526.55 as of 1:06 p.m. in Tokyo, headed for its lowest close since Dec. 25. The broader Topix index dropped 0.5 percent to 935.90, with more than twice as many stocks declining as advancing. The Topix had the lowest return last year among benchmark indexes in the world’s 40 largest markets, climbing 5.6 percent. Stocks in the index trade at an average of 37.1 times estimated earnings, compared with 14.2 times for the Standard & Poor’s 500 Index in the U.S. and 12.6 times for the Dow Jones Stoxx 600 Index in Europe. Commodities Decline Japan Petroleum fell 0.6 percent to 4,365 yen. Mitsubishi Corp. declined 1.1 percent to 2,267 yen. Sumitomo Corp., Japan’s third-largest trading company, dropped 1.3 percent to 1,024 yen. Crude oil for March delivery lost $1.54 to $74.54 a barrel in New York on Jan. 22, and gold futures for February delivery decreased 1.2 percent to $1,089.70 an ounce, a one-month low. The Standard & Poor’s 500 Index fell 2.2 percent in New York on Jan. 22, plunging the most since October, as financial shares slumped. Obama last week proposed limiting the size and trading activities of financial institutions as a way to reduce risk-taking and prevent another financial crisis. The proposals, to be added to an overhaul of regulations being considered by Congress, would prohibit banks from running proprietary trading operations solely for their own profit and sponsoring hedge funds and private equity funds. “If the proposal does go through, Japan may face downward pressure from a slowdown in the financial industry as the U.S. economy weakens,” said Ryuta Otsuka, a strategist at Toyo Securities Co. in Tokyo. TDK Advances Toyota slid 1.7 percent to 3,985 yen, and was the biggest drag on the Topix. Honda Motor Co., which gets 42 percent of its sales from North America, lost 0.9 percent to 3,200 yen. Nikon Corp., a Japanese camera maker which derives 29 percent of its revenue from North America, retreated 2.1 percent to 1,933 yen. Among stocks that rose, TDK Corp. added 2.4 percent to 6,010 yen. The maker of electronic components had an operating profit of more than 11 billion yen ($122 million) for the three months ended December and may raise its forecast for the year ending March, the Nikkei newspaper reported Jan. 23. --With assistance from Satoshi Kawano in Tokyo. Editors: Nicolas Johnson, Darren Boey. To contact the reporter for this story: Kana Nishizawa in Tokyo at +81-3-3201-8374 or knishizawa5@bloomberg.net. To contact the editor responsible for this story: Darren Boey at +852-2977-6646 or dboey@bloomberg.net.

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